Day Trading Business
The Best Home-Based Business?
Is day trading a business? - Of course, and it should be treated as such.
A day trading business requires dedicated research & education, preparation/practice, adequate working capital, and equipment & inventory just like any other traditional, start-up businesses would require.
I'll try to draw some simple analogies to starting a restaurant business or dentistry practice.
DEDICATED RESEARCH & EDUCATION
Whether you're plan is to start a new restaurant or a day trading business, you better know something.....no make that a lot about either one. Because, in both there is a whole lot of competition and only the best are going to survive. The rest are only going to lose money. In the case of day trading, the losers money flows into the pockets of the winners.
Imagine starting a small restaurant with no background in the business, no experience managing people, and no experience cooking or waiting on tables. I'm sure it's been done, but the success stories are probably far and few between.
The most likely scenario is that quite a bit of start-up capital would be lost on labor, food and rent the first year and later have to shut the doors.
I assure you the same can be said of day trading. Before trading your first share of stock, you are going to have to put in a massive amount of time into educating yourself.
The research and homework you must do, to compete in this business and not lose money will be overwhelming to some. And, for many it will take years, before finding success.
Look at the guy that wants to start a dentistry practice, so that he can hopefully bring in at least a six figure income every year. How long did he go to school for his degree? How much money did he or his parents spend on his education? Tens of thousands of dollars I'm sure, and thousands of hours of work.
Is there any reason you should expect to surf into the markets ill prepared, compete with with some of the brightest people on the planet -- and just walk away with boatloads of money every week? It ain't gonna happen. I don't care how smart you are, you're going to have to put you're time in or you'll just be another statistic.
PREPARATION & PRACTICE
How many people does a dentist have to practice on in dental school before opening his own business? How many golf balls does a professional golfer have to hit before playing in major tournaments? How many hours of practice on a piano or violin does someone need to get a decent paying job in an orchestra?
It's no different for becoming a professional day trader with a day trading business. Thousand of hours must spent educating yourself. And, many hours of practice should be put in on a trading simulator and then later trading small lots, before trading full account size and especially margin.
ADEQUATE WORKING CAPITAL
There's simply no sense in starting a business without adequate working capital. With a new restaurant start-up, an owner is going to have to shell out money for rent, labor, food, and unexpected expenses, all at a loss until the revenue coming in the door exceeds his expenditures. This can go on for weeks or months. Some, unfortunately don't start their businesses with enough capital or credit resources to make it through the initial start-up period, even though they might see some increasing sales.
It no different for a day trading business. You've got to have enough capital to get by the 'start-up' learning phase. Remember, with stocks there's the pattern day trader rule. So, you've got to keep a minimum of $25k in your account at all times. That means keeping a decent sized buffer amount in there in case you happen to start with a string of losses and a drawdown. Which absolutely should be planned for. Most brokers, by the way, won't even allow you to open a stock day trading account with less $30k.
EQUIPMENT & INVENTORY
A restaurant business needs cooking equipment, pot and pans, tables, canned food, produce, etc. A dentistry practice needs dental chairs & dental lights, x-ray equipment, waiting room furniture, etc.
One of the great things about a day trading business is the amount of money it takes to get into the business. It's very small compared to other businesses. Four thousand dollars or less can buy you all the computer equipment, office equipment and day trading software you'll need to get started.
It takes a heck of a lot more than that to start-up most other businesses that have as large a potential for profit as day trading.
A restaurant's inventory is it's food. Your inventory will be the instruments (stocks, futures) that you trade.
A restaurant owner wants to turn over his inventory as quickly as possible in the same way day after day. Moving customers in and out the door...get'em in, get'em out.
With a day trading business, a day trader wants to do the same....turning over stocks and extracting money from them as
efficiently and quickly as possible, day after day using his same methods over and over.
Take your future day trading business seriously by taking the necessary steps for education, planning and preparation. Add a lot of patience, and you just might be able to have one of the best, if not THE best home-based businesses ever created!